Which Trump Will Show Up on Jan. 20 ?

Investor’s first read – Daily edge before the open
S&P 500: 2,163
Nasdaq Comp.:5,251
Russell 2000:1,282
Thursday, November 10, 2016 7:55 a.m.
Interesting – the DJIA rose 444 points (2.5%) the two days prior to the election after the FBI exonerated Secretary Clinton on a new batch of e-mails. The Street was relieved, since it felt more comfortable with her as president than Donald Trump.
So Secy. Clinton loses Tuesday night, and after some overnight angst, the market surges another 256 Points yesterday.
So what does all this mean ? How much better can things get with both the economic expansion and bull market well into their seventh year, the latter up 225%.
By January 20, the Republican Party will control the presidency both houses of Congress and shortly the Supreme Court.
That means they can pursue their agenda aggressively. Trump will want to spend on some things, cut on others. Democrats and deficit hawks in Congress may have other ideas.
Right now it is chill out time. President Obama and Secretary Clinton have wished President-elect Trump well and the Street is buying “Trump stocks” and selling stocks even bonds that will become casualties of a new untethered Administration.
Infrastructure stocks are up sharply in anticipation of big spending there, though they were on Clinton’s radar screen, as well.
Companies that stand to benefit from a rush to lift regulations, such as oil refiners, drugs, steel and banks are attracting feverish buying..
Renewable energy stocks are getting hit, as are bonds which are being dumped in favor of stocks (see iShares 20-year Treasury ETF below).
Healthcare companies are vulnerable, since Trump has promised to repeal Obamacare, though it almost has to be replaced, since 13 million are enrolled, 20 million including children, etc.

The shock of Trump’s unexpected win was absorbed in international markets overnight, enabling the markets here to stabilize. When the Street began to hone in on prospective Trump beneficiaries, the market got legs.
This kind of “rush” can continue, off and on as speculation festers and until reality sets in. Trump has promised to do some very unpopular and polarizing things, repeal of Obamacare for one, sending illegals back to their former homeland, and gutting regulations. Then there is the mid-east, and trade agreements. How popular will it be to pay 30% more for soft goods, electronics if trade tariffs are imposed ?
“Establishment politics” takes all these issues in stride, no draconian moves. That is done for time-tested reasons, because things done rashly can have irreversible impact.
But the establishment has been sent packing, so it’s a new ball game, and the Street has yet to chew on that one.
We have a play-hard, but sit close to the exit market that can get wilder than anything we have seen.
The stage is set for extended uncertainty, because no one knows which Donald Trump will show up on January 20, who else will call the shots and who will expect pay-back for campaign support. The presidency is not like running a company where employees are expected to do what they are told or get fired, so it will be a challenge. If Trump sees the office as a platform for negotiating deals (compromise), it will go better than if it is a one-way street.
SUPPORT “today”: DJIA:18,351; S&P 500:2,143; Nasdaq Comp.:5,203
RESISTANCE “today”:DJIA:18,701;S&P 500:2,176; Nasdaq Comp.:5,266.
The six months between November 1 and May 1, tend to outperform the six months between May 1 and November 1, labelled the “Best Six Months” by the Stock Trader’s Almanac which began tracking the pattern in 1986.
iShares 20-Year Treasury ETF down 13% in 4 months
Long-term bonds have gotten hammered in the last three months. The iShares 20-yr U.S. treasury bond ETF has lost 13.3% since July. That’s nearly 6 times the yield an investor expected over 12 months. Obviously, bonds can be risky. Let’s not forget the name of the game is to buy low and sell high, which applies to long bonds as well as stocks.
A survey of economists reported by Bloomberg yesterday calls for U.S. inflation to surpass the Fed’s target in every quarter of 2017, which if even half true should depress long-term bonds even more.
The Employment Situation report came in Friday, 161,000 jobs were added in October, the unemployment rate was 4.9%.
On occasion, I technically analyze each of the 30 DJIA stocks for a reasonable risk, a more extreme risk, and an upside potential over the near-term. I add the results of each, then divide by the new DJIA “divisor” (0.14602) to get the DJIA for those levels. This gives me an internal check on the DJIA itself, especially if certain higher priced stocks are distorting the averages.
As of October 21, 2016, a reasonable risk is 18,026 a more extreme risk is 17,986 Near-term upside potential is 18,481.
 STATUS OF MARKET: Neutral – trending to bullish
 OPPORTUNITY: RISK: Opportunity !
 CASH RESERVE: 25% – 35%.
 KEY FACTORS: Uncertainty of election to be resolved in two days, earnings slide may be over.
Note: Source of weekly economic calendar and good recap of indicators: mam.econoday.com.
*Stock Trader’s Almanac
George Brooks
Investor’s first read
A Game-On Analysis, LLC publication
Investor’s first read, is a Game-On Analysis, LLC publication for which George Brooks is sole owner, manager and writer. Neither Game-On Analysis, LLC, nor George Brooks is registered as an investment advisor. Ideas expressed herein are the opinions of the writer, are for informational purposes, and are not to serve as the sole basis for any investment decision. References to specific securities should not be construed as particularized or as investment advice as recommendations that you or any investors purchase or sell these securities on their own account. Readers are expected to assume full responsibility for conducting their own research pursuant to investment in keeping with their tolerance for risk.

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